1. Report Industry Investment Rating There is no specific industry investment rating provided in the report. 2. Core Viewpoints of the Report - The bond market at the beginning of 2026 seems to mirror the situation at the beginning of 2025. Despite short - term uncertainties, considering the rapid decline in duration and the central bank's supportive attitude, the future adjustment space of the bond market is limited. Once the impacts of factors such as supply, credit, and the A - share market are weaker than expected, the bond market may continue to follow the mirror image of early 2025 and experience a recovery [2][10]. - At present, the A - share and commodity price trends are not sufficient to trigger a reversal in the bond market direction. During the adjustment process, the impact of ultra - long bonds on the net value of public funds has weakened, which helps to mitigate market shocks [8][10]. - It is recommended to maintain a certain leverage, use 2 - 3 - year medium - to - high - grade credit bonds as the bottom - position, focus on 3 - 5 - year secondary perpetual bonds in the short term, and trade long - term bond bands opportunistically according to market conditions [10]. 3. Summary According to the Table of Contents 3.1. The Market Adjustment Since the Beginning of the Year is Due to Traders' Concerns about Supply Rather Than the Supply Shock Itself - The core concern in the market is the supply - demand of ultra - long bonds. The market adjustment is affected by the large issuance scale of key - term treasury bonds in January and the high proportion of ultra - long local bonds in some regions [3][16]. - Although the issuance scale of key - term treasury bonds in January has increased, the net financing scale of treasury bonds in Q1 2026 is only slightly higher than that of the same period last year. The estimated net financing scale of local bonds in Q1 2026 may be lower than that of the same period in 2025 [20][26]. - Local governments may prefer to issue long - term bonds because refinancing bonds cannot fully cover the maturing local debt. However, the national fiscal work conference emphasizes optimizing the government bond tool portfolio, so the issuance term of local bonds may not be further extended compared to 2025 [3][30]. - The recent market adjustment is mainly caused by the large - scale net selling of public funds and securities firms. It is more of an emotional weakening due to supply concerns rather than a substantial impact. As long as the 30 - year treasury bond is the most actively traded, its pricing is still determined by traders, and it has shown higher cost - effectiveness after the recent adjustment [4][31][37]. 3.2. If External Disturbances Are Weaker Than Expected, the Bond Market May Follow the Mirror Image of Early 2025 and Experience a Recovery - Despite the continuous net withdrawal of OMO and the non - excessive renewal of 3M repurchase, the loose capital state continues, which may be related to the year - end fiscal deposit release and the central bank's supportive attitude. The probability of a reserve requirement ratio cut in January has significantly increased, and the central bank's net purchase of treasury bonds is also expected to rise [41][43][45]. - Historically, supply shocks have a greater impact on the bond market in a tight liquidity environment. Currently, the central bank's attitude is supportive, and the bank's liabilities do not show obvious pressure, so the supply shock may be less than expected. The central bank has the motivation to solve the problem of the supply - demand imbalance of government bonds [47][49]. 3.3. Wait for the Impact of Risk Preference Changes to Gradually Fade - The bond market adjustment is also related to the continuous rise of the A - share and commodity prices. However, as the upward slope of the A - share market becomes steeper, its volatility increases, and the impact on the bond market has weakened. The rise in commodity prices may be short - term, and the recovery of CPI still faces challenges [50][51][56]. - During the adjustment process, the impact of ultra - long bonds on the net value of public funds has weakened, which helps to mitigate market shocks. Although short - term uncertainties remain, the future adjustment space of the bond market is limited, and there is no need to be overly pessimistic about the subsequent bond market [64][71].

Core Insights - The report maintains a strong market rating for the medical device industry, emphasizing the importance of capitalizing on overseas expansion and the commercialization of AI in healthcare [1][3][5] Medical Device Strategy - The strategy focuses on a three-step approach: prioritizing overseas expansion, benefiting from centralized procurement, and being sensitive to fiscal policies [3][5] - The report highlights the acceleration of overseas growth, particularly in high-value orthopedic, electrophysiology, and robotic sectors, which are expected to be the main contributors to growth in 2025 [5][24] - Companies such as MicroPort, Tianzhihang, and Weigao are recommended for their potential in overseas markets and innovative product offerings [5][24] AI Applications and Brain-Computer Interfaces - The report identifies a significant opportunity in AI applications, with a focus on the commercialization phase driven by policy support and market demand [4][9] - The brain-computer interface sector is poised for growth, with several leading companies expected to go public soon, which could catalyze the market [9][24] Financial Performance and Market Trends - The medical device sector is showing signs of recovery, with Q3 2025 revenues reaching 593.7 billion yuan, a year-on-year increase of 2.9%, indicating a clear upward trend [13][31] - The report notes a significant contraction in fund allocation to the medical device sector, dropping from 24.5% to 15% from Q3 2022 to Q3 2025, suggesting potential for valuation recovery [14][21] Overseas Growth Potential - The report emphasizes the importance of overseas markets, particularly in Europe and the U.S., where companies are transitioning from product-focused strategies to comprehensive commercialization partnerships [5][24] - Key growth areas include surgical robots and high-value consumables, with companies like Tianzhihang and MicroPort leading the charge in international markets [24][30] Fiscal Policy Impact - The report discusses the sensitivity of equipment demand to fiscal policies, with expectations of a more favorable environment as inventory levels decrease and demand normalizes [31][34] - The anticipated release of more proactive fiscal signals in the upcoming years is expected to support the recovery of the medical device sector [31][34]

Core Insights - The chemical industry is expected to experience a recovery in profitability in 2026, marking a new starting point for supply-demand rebalancing, driven by anti-involution policies and advancements in new productive forces such as AI and robotics [2][5]. Group 1: Industry Overview - The chemical industry faced a downturn in profitability and valuation in 2025, but signs of stabilization and recovery are anticipated in 2026 [2]. - The peak of capital expenditure in the chemical sector has passed, with fixed asset investment turning negative in the second half of 2025, indicating the end of the capacity expansion cycle [5][14]. - The Producer Price Index (PPI) for chemicals is expected to gradually turn positive in 2026 after a prolonged period of decline [14]. Group 2: Investment Themes - Capital expenditure is decreasing, and leading companies like Wanhua Chemical are expected to see a recovery in profitability as they reduce capital spending and increase their global market share in MDI [5]. - The anti-involution policy is reshaping supply dynamics, with a focus on quality development and the exit of outdated capacities, benefiting companies with innovative capabilities and export advantages [5]. - New materials are driving demand growth in traditional chemicals, with companies like Dinglong Technology and Anji Technology positioned to benefit from domestic substitution in high-end materials [5]. Group 3: Market Dynamics - Chemical prices have been under pressure, with the chemical product price index declining approximately 8.8% in 2025, but stock prices in the sector have rebounded by 33.3% [10][16]. - The operating rates of mainstream chemical products are showing signs of weakness, with inventory levels varying significantly across different products [17][18]. - The supply-demand balance for phosphate rock remains tight, with stable prices for high-grade phosphate rock, while the market for phosphate fertilizers is influenced by policy and demand fluctuations [46][43]. Group 4: Global Trends - The global chemical supply is shifting towards China, which has become the largest chemical producer, while European chemical production faces challenges due to high energy costs [31][33]. - The restructuring of supply chains due to tariff disturbances is prompting companies to adapt, with a focus on overseas expansion for leading chemical firms [26][22]. - The anti-involution policies are expected to enhance industry cash flow and promote sustainable development by curbing disorderly expansion and prioritizing profitability [40].

Core Insights - The report emphasizes the importance of longevity medicine, which focuses on proactive health and disease prevention, as a critical response to the aging population and the challenges of "pathological longevity" [2][9][14] - The aging population in China is rapidly increasing, with the number of individuals aged 65 and above reaching 203 million in 2023, accounting for 25% of the global elderly population [10] - The demand for longevity medicine is accelerating, driven by the need for aging management, early prevention, and comprehensive health optimization, transitioning the healthcare model from disease treatment to continuous management [2][11][14] Industry Overview - The longevity medicine industry in China is still in its early stages, characterized by a dual-track development model where public institutions focus on research foundations while private entities explore service and business models [11] - The industry is facing structural pressures due to the increasing burden of chronic diseases and the inefficiencies of the traditional disease-centered healthcare system [2][10] - The report highlights that the core competitive advantage in the industry will shift towards long-term health management capabilities, data integration, and value proposition [11] Market Performance - The pharmaceutical sector showed positive performance in the week of January 5-9, 2026, with all six sub-sectors recording gains, particularly in medical services (+12.34%) and medical devices (+9.42%) [15] - The report notes that the valuation levels for biopharmaceuticals and chemical pharmaceuticals are among the highest, at 89.93 times and 84.19 times respectively [15] Innovations and Developments - A significant breakthrough in cancer vaccine research was reported by a team from Peking University, utilizing protein-targeted degradation technology to enhance immune response against cancer cells [22][25] - The new basic medical insurance drug list was implemented on January 1, 2026, with over half of the newly added 114 drugs already available in medical institutions [26] - The National Medical Products Administration is enhancing support for innovative drugs, aiming for a significant increase in the approval of new drugs and medical devices in 2025 [27][30][31]

Group 1: Fixed Income Plus Fund Tracking - The three categories of Fixed Income Plus products recorded positive returns, with mixed and stock-type funds rising by 0.74% and 0.66% respectively in December [2][13] - Fixed Income Plus funds have reduced their exposure to growth styles in equities while slightly increasing their stock positions [4][20] - The selected Fixed Income Plus fund portfolio outperformed the secondary bond index by 0.66% in December and by 0.98% in 2025 [5][24] Group 2: Pure Bond Fund Tracking - The medium to long-term pure bond fund index increased by 0.06% in December, with a total return of 0.83% for 2025 [31] - In December, pure bond funds adjusted their credit bond allocation upwards compared to November, indicating a strong consistency in credit strategy adjustments [6][34] - The selected pure bond fund portfolio outperformed the medium to long-term pure bond fund index by 0.16% in December and by 0.37% in 2025 [7][39]

Group 1 - The core viewpoint of the report highlights the "leverage" characteristic of convertible bonds, with the China Securities Convertible Bond Index rising by 4.45% last week, marking the second-highest weekly increase since "924" in 2024. This performance reflects a significant increase in investment interest in convertible bonds [2][9]. - The report emphasizes that convertible bonds exhibit "leverage" during bull markets, as their parity follows the rise of underlying stocks, and their valuation is a function of stock trends. This "dual-driven valuation" can lead to convertible bonds outperforming their underlying stocks in certain phases [3][12]. - The report notes that among 110 equity-type convertible bonds, only one has both the stock and the bond breaking previous highs, while 43 bonds have surpassed their previous highs without the corresponding stock doing so, indicating a strong performance of convertible bonds relative to their underlying stocks [17][20]. Group 2 - The report discusses the investment behavior of secondary bond funds, which have been gradually increasing their stock allocation while reducing their allocation to convertible bonds. This trend suggests a reflection of high valuations and declining cost-effectiveness of convertible bonds [22]. - It is noted that the implied volatility of convertible bonds has been consistently higher than the actual volatility of underlying stocks since late September 2025, indicating a potential break from historical patterns and reinforcing the leverage characteristic of convertible bonds [12][23]. - The report also highlights that the implied three-month yield has entered a warning zone of less than -5%, and indicators of market overheating have been triggered, suggesting that short-term trading risks should be closely monitored [4][28].

Investment Rating - The report maintains an "Outperform" rating for the industry [5] Core Insights - The cancellation of export tax rebates for lithium batteries and photovoltaic products is expected to accelerate the clearing of outdated production capacity and promote global expansion [2][19] - The energy storage sector is experiencing rising prices for systems and EPC contracts, driven by strong demand [50][51] - The wind power sector is advancing with multiple offshore wind projects receiving approval, indicating ongoing growth in domestic offshore wind energy [34][35] Summary by Sections Lithium Battery Sector - A meeting was held by four departments to regulate the competitive order in the lithium battery industry, proposing the cancellation of export tax rebates for lithium batteries [9][10] - The Chinese government plans to cancel or reduce export tax rebates for battery-related products starting April 1, 2026 [10] Photovoltaic Sector - The official cancellation of export tax rebates for photovoltaic products is set for April 1, 2026, marking the end of the "rebate dividend" era [19][20] - This policy is expected to lead to a surge in orders and installations before the policy takes effect, while long-term effects include the elimination of low-cost competition and a shift towards technological innovation and brand building [19][20] Wind Power Sector - Several offshore wind projects in Jiangsu have been approved, with ongoing progress in deep-sea offshore wind projects [34][35] - The approval of a 1GW offshore wind project in Guangdong and a 0.8GW project in Jiangsu highlights the sector's growth [34] Energy Storage Sector - In December, the average prices for energy storage systems and EPC contracts increased, with strong demand noted in regions like Xinjiang and Shanxi [50][51] - The adjustment of export tax policies for batteries is expected to increase export costs, potentially leading to a surge in exports before the policy takes effect [52] Power Equipment Sector - The CES2026 event showcased the successful launch of the Rubin platform, which is expected to enhance AI computing capabilities [60][61] - The Qinggui DC project has entered the feasibility study phase, marking significant progress in high-voltage direct current transmission projects [62] Hydrogen Energy Sector - The National Energy Group has undergone structural adjustments, establishing a new hydrogen energy division, emphasizing hydrogen as a key growth point in the economy [74][77] - The procurement of a hundred-ton SAF unit indicates ongoing investment in hydrogen technology [78]

Investment Rating - The report maintains a rating of "Outperform" for the industry [6] Core Views - Precious metals are experiencing high volatility due to geopolitical tensions, with gold prices supported by weak manufacturing data and expectations of further monetary easing from the Federal Reserve [3][11] - Industrial metals, particularly copper, are facing supply disruptions amid geopolitical tensions, leading to fluctuating prices, while aluminum prices are influenced by international supply constraints and domestic demand [4][12][13] - The price of lithium carbonate has surged significantly, driven by strong demand from the electric vehicle and energy storage sectors, indicating potential investment opportunities in lithium-related stocks [17][18] - Other minor metals, such as rare earths, are showing stable price increases, with limited low-priced offerings in the market [19] Summary by Sections 1. Precious Metals - Geopolitical conflicts have heightened demand for safe-haven assets, leading to fluctuations in gold prices, with the market awaiting key economic data [10][11] - Key stocks to watch include Zijin Mining, Zhongjin Lingbao, and various H-shares [3][11] 2. Industrial Metals - Copper prices have seen a rise due to supply concerns from Chile and Ecuador, with market optimism for year-end prices [4][12] - Aluminum prices have been volatile, influenced by geopolitical tensions and domestic consumption patterns [13][16] - Notable stocks include Jiangxi Copper, Luoyang Molybdenum, and various H-shares [4][16] 3. New Energy Metals - Lithium carbonate prices have increased significantly, with futures prices nearing 150,000 yuan/ton, indicating strong demand from the supply chain [17] - Key stocks in this sector include Ganfeng Lithium, Tianhua, and others [18] 4. Other Minor Metals - Rare earth prices are on the rise, with limited low-priced offerings in the market, indicating a tightening supply [19] - Stocks to monitor include China Rare Earth, Northern Rare Earth, and others [19] 5. Market Review - The non-ferrous metals index rose by 8.6%, outperforming the broader market, with tungsten showing the largest gains among sub-sectors [22][30] - Top-performing stocks include Zhizhe New Materials and Dongyangguang, with significant price increases noted [33] 6. Valuation - The current P/E ratio for the non-ferrous metals industry stands at 32.29, with aluminum showing potential for valuation increases due to supply constraints [35]

Investment Rating - The industry rating is "Outperform the Market" [4][68]. Core Insights - The report highlights fluctuations in pig prices, with a focus on supply rhythm changes. As of January 9, the pig price was 12.58 CNY/kg, showing a week-on-week decrease of 0.09 CNY/kg. The report notes that the northern farming sector is experiencing tight supply due to previous overselling and disease impacts, while southern enterprises are increasing output, leading to weaker price adjustments [2][9][30]. - In the beef sector, calf prices are rising, and import restrictions on beef are expected to support long-term price increases. As of January 9, the price for fattening bulls was 25.51 CNY/kg, up 0.08% week-on-week, while calf prices reached 32.41 CNY/kg, up 2.43% week-on-week. The report anticipates a tightening supply of beef in the coming years due to a decrease in breeding cows [3][34]. - The poultry sector is affected by an outbreak of avian influenza in France, leading to tightened breeding imports. The price for white feather broilers was 7.64 CNY/kg as of January 9, down 0.08% week-on-week. The report suggests that the ongoing restrictions on imports may lead to a contraction in upstream capacity [3][41][45]. Summary by Sections Swine Industry - Pig prices are currently experiencing fluctuations, with a noted decrease in average weight of pigs being marketed. The average weight as of January 8 was 128.54 kg, down 0.12 kg week-on-week. The report indicates that the industry is facing losses, and capacity reduction policies are expected to continue, potentially leading to a long-term increase in pig prices [2][11][30]. - The average daily slaughter volume for the week was 189,800 pigs, reflecting a week-on-week decrease of 5.13%. The report also mentions a decrease in frozen product inventory rates, which stood at 19.48% as of January 8, down 2.06 percentage points week-on-week [11][30]. Beef Industry - The report indicates that calf prices are on the rise due to increased demand from breeding farms. The long-term outlook for beef prices is positive, supported by import restrictions on beef that will limit supply [3][34]. Poultry Industry - The report notes that the outbreak of avian influenza has led to a halt in the pricing of broiler chicks, with current prices for white feather broilers slightly down. The ongoing restrictions on imports are expected to impact upstream production capacity [3][41][45]. Dairy Industry - The report states that raw milk prices are currently at a low point, with the price as of January 2 being 3.03 CNY/kg, unchanged week-on-week. The ongoing losses in the dairy sector are expected to lead to continued capacity reduction, with a potential stabilization of prices in 2026 [3][35]. Seed Industry - The report discusses the strengthening of intellectual property protection in the seed industry, highlighting recent cases that aim to combat infringement and improve market order. This regulatory environment is expected to support the revitalization of the seed industry [52].

Investment Rating - The report maintains a "stronger than the market" rating for the defense and military industry [5] Core Viewpoints - The report emphasizes the strong radiation effect of commercial aerospace, highlighting significant developments in the sector, including the approval of satellite frequency resources and the construction of additional satellites by SpaceX [37][38] - The report notes that the military industry index has outperformed the broader market, with a 13.63% increase compared to a 2.79% rise in the Shanghai Composite Index during the same period [10][37] - The report suggests that the commercial aerospace sector will continue to drive asset value reassessment across various industries, particularly in the rocket supply chain and satellite networks [39] Summary by Sections 1. Weekly Market Review - The military industry index rose by 13.63% from January 5 to January 9, outperforming the Shanghai Composite Index by 10.84 percentage points [10][16] - The aerospace sector showed a significant increase of 34.57%, while the low-altitude economy sector performed relatively flat [21][24] 2. Key Developments in the Industry - The report highlights the approval of plans to accelerate the construction of advanced manufacturing in Guangzhou, which includes support for satellite constellation projects [37] - The report mentions the successful launch of SpaceX's Falcon 9 rocket, which deployed an Earth observation satellite [41] 3. Investment Recommendations - The report recommends focusing on specific companies within the rocket sector, overseas commercial aerospace, satellite technology, nuclear fusion, stealth materials, deep-sea technology, engines, unmanned systems, AI, aircraft, and land equipment [40]